A Trade Everyone Seems To Be In
Despite the high gas fees and numerous other hurdles, Ethereum continues to reign as the layer 1 of most hope. Although you will often hear many complaints regarding gas fees, the Crypto community continues to hold and view ETH in very high regard. It is rather interesting how this never seems to change. Even when MATIC, Solana, and Avalanche shocked the market with blistering price action, the attention always returned to ETH. It’s almost as if Ethereum allows these “ETH killers” to have a shot at the crown, just prior to reasserting dominance. When you observe the transactional volume of a blockchain like Solana against Ethereum, it is evident that Solana processes way more transactions than ETH.
There may well be more transactions processed on the Solana chain but ETH still dominates the market when it comes to trading volume. Ethereum trades approximately 20X the daily trading volume of Solana.
Utilizing Alternatives While Betting On ETH
This is rather strange when you think about it but it’s true! Many choose to make use of an ETH alternative for transacting while simultaneously holding ETH in anticipation of what the future may hold. Logically, the chain that has the adoption should be the one that succeeds, right? This is exactly why I choose to hold modest amounts of alternative layer 1 blockchains such as Solana, Fantom, and even Secret. SCRT is privacy-based, which could turn out to be a real wild card.
Getting back to ETH, looking at the charts reveals two very bullish case scenarios that could play out in the near future. Let’s take a look at the charts.
Looking at the daily chart, there appears to be a double bottom playing out and nearing the neckline. Double bottom patterns are bullish reversal patterns and are typically seen in the Bitcoin price action. BTC tends to respect this pattern and is often instrumental in triggering bullish pumps to the upside.
As seen above, the neckline is approximately at the $3200 level. A confirmed breakout above the neckline will most likely drive ETH to the 4K level once again. This recent pump doesn’t seem to have too much volume so we will have to watch and see how this pattern plays out.
In the event that ETH is rejected at the neckline, there is still another opportunity at hand for ETH to move higher. A rejection at $3200 is not necessarily a bad thing, as a new pattern is waiting in the wings to take over from the failed double bottom. As seen below, ETH now has the opportunity to form an inverse head and shoulders pattern, which is also a bullish reversal pattern.
This particular pattern has been respected quite often of late and is perhaps the one that stands a greater likelihood of playing out. Both patterns aim to propel ETH towards 4K in the event that they succeed. At the time of writing, ETH has retreated to trade just below $3K at approximately $2960, which at this stage points to the latter of the two options being the most likely to succeed.
Technical analysis is a game of probability and not necessarily a guarantee. We will have to keep a close eye on the price action and wait for a confirmation. There is also the chance that both patterns are rejected and ETH heads lower. It would however be great to see ETH at $4K again but we will have to wait and see!
See you again soon and hopefully, ETH has broken out above $3200!